A global study by Finastra suggests Singapore is leading the way towards the next evolution in financial services with the adoption of Banking-as-a-Service (BaaS).

Almost half of respondents (47%) having deployed or improved their BaaS capabilities in the last year and a similar proportion (45%) looking to do so in the next 12 months – higher than in any other market surveyed.

This investment activity is accompanied by some of the highest confidence globally in BaaS, with 87% of those surveyed expecting to see benefits in the coming year.

Open Banking bears fruit

The ‘Financial Services: State of the Nation Survey 2021’ also reveals that open banking has become important to 97% of Singapore respondents’ businesses, with over half (56%) calling it a “must have”.

The Singapore audience said that open banking has provided a number of benefits to their organisation, including improving the customer experience (79%), delivering new services (93%) and improving internal systems (57%).

As well as helping to attract new customers (71%), Singapore finance professionals also stated that open banking has helped to attract different types of customers (64%).

Less than 2% of respondents in Singapore now think that open banking will not have any impact.

The research was conducted in March 2021 amongst 785 professionals at banks and financial institutions across Singapore, Hong Kong, the US, UK, France, Germany and the UAE.

It explores the open banking and finance landscape, the technology and initiatives set to make an impact in financial services over the next year, and also how COVID-19 has impacted the sector.

Barriers to innovation

Almost 90% (89%) of those surveyed in Singapore agreed that adoption and integration of technology and innovation should be at the forefront of the financial services sector.

However, a number of key barriers to innovation persist, showing little change compared to Finastra’s 2020 survey:

• 56% said management or decision makers are stuck in old ways of thinking (58% in 2020)

• 53% said regulations are too tight (56% in 2020)

• 44% said there is not enough industry or government support to foster innovation (no change from 2020)

• 56% cited the cost of development/expense of R&D (51% in 2020)

In line with the rapid shift towards digital services last year, 9 in 10 (87%) of those surveyed said COVID-19 had accelerated the integration of new technology and innovation.

In Singapore, this translated into the largest average increase in digital banking investment of any market (25%) and the highest proportion of respondents globally saying their bank increased overall investment/budgets in response to the pandemic (84%).

In fact, adapting to the challenges brought by the pandemic was the third biggest driver of the adoption of technology (47%), just behind cost cutting and efficiency (54%) and business growth (48%).

“Our research uncovered an overwhelming recognition in Singapore that Banking-as-a-Service has the potential to help financial institutions grow their business, bring new services to market faster and streamline company operations.

 

The level of Banking-as-a-Service deployment in the last year shows that Singapore’s financial services sector is living up to its progressive reputation when it comes to technology,”

said Luc Hovhannessian, Managing Director of APAC at Finastra.

Featured image edited based on photo by Swapnil Bapat via Unsplash